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The Worst May Be behind Us

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It’s not every day you get to meet a legend. Last Friday we had a visitor in the office who is arguably the most influential figure in the world of blockchain, some would say in the entire world of computer development.

Vitalik Buterin is the creator of the cryptocurrency network Ethereum and his views are rarely disputed. On his way to a blockchain conference, he managed a quick stop in to visit us here at eToro’s headquarters and even answered some of our questions.

The full Q&A session is at: https://www.youtube.com/watch?v=F_ETd_5E1iI&t=18s

@MatiGreenspan
eToro, Senior Market Analyst

 

Please note: All data, figures, and graphs are valid as of September 11th. All trading carries risk. Only risk capital you can afford to lose.

Market Overview

As Hurricane Irma pelts the western shores of Florida the United States mourns on the 16th anniversary of the worst terror attack in US history.

Now that entire streets in Miami and other major cities have turned into rivers and Hurricane Jose does not appear to be on its way to enter the United States, it may be possible that the worst is already behind us.

Meanwhile in Mexico, the massive 8.1 magnitude earthquake has claimed a total of 90 lives and the damage to buildings is still being assessed.

In North Korea, we have thankfully not seen any new nukes over the weekend. However, rhetoric from the communist dictator persists. Kim even threw a party for all his nuclear scientists to celebrate the success of the program.

Markets in Japan are flying this morning with the Nikkei 225 up 1.41% thanks to some minor data. The Chinese index had a great start to the day but the growth was not sustained and the markets are now down.

European indices are just opening now with a significant gap up over the weekend.

Defective Markets

Now that the financial crisis is considered to be over by most economists and financial analysts it’s time to tally the damage for this too.

However, unlike a hurricane or an earthquake, it’s much more difficult to rebuild after an event like the subprime mortgage crisis. The central bank’s main response to the crisis was to buy financial assets but left most of the structural problems alone.

Imagine if the US government comes into Texas today and starts buying property without fixing anything. Then in 5 years from now claims that the prices of housing has gone up and therefore the problem is solved.

In any case, the banks may have overplayed their hand just a bit. In a recent blog post, JP Morgan’s Andrew Norelli points out that given all of the disasters in the USA (natural and political) stocks should not be where they are right now. Instead, they are being driven by something bigger, the Fed’s Balance Sheet.

The United States is not the biggest culprit though. As we can see above, the USA has stopped their buying program around the start of 2015 and is now thinking about how to reduce it.

On the other hand, countries like Europe and Japan are still buying aggressively. At this point, the Bank of Japan actually owns about 75% of all the ETFs in the country making them the largest player in their own “free” market.

China Ban Hammer

A rumor has begun to circulate that Chinese Peer to Peer exchanges may be under question. A rumor that has sent crypto markets down quite significantly.

A quick glance at trading volumes, on the other hand, shows us that Chinese exchanges OK coin and Huobi are operating at a normal level with a combined volume of 147,233 BTC ($617 Million) over the last 24 hours.

Another conflicting report is coming from Chinese State owned television saying that the ICO ban from a week ago is indeed temporary and that the government only sought to regulate the scams out of the highly volatile ICO market.

26 of the top 30 cryptocurrencies are in the green at the moment. If this momentum is sustained throughout the day it may indeed be a good indication that the worst may be behind us.

This content is provided for information and educational purposes only and should not be considered to be investment advice or recommendation.
The outlook presented is a personal opinion of the analyst and does not represent an official position of eToro.

Past performance is not an indication of future results. All trading involves risk; only risk capital you are prepared to lose.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.7 stars on average, based on 103 rated postsSenior Market Analyst at Etoro.com.




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7 Comments

7 Comments

  1. Winklevoss

    September 11, 2017 at 1:42 pm

    ‘P2P’ exchanges such as those similar to LocalBitcoins or other OTC platforms have explicitly been said to be outside the rumored bans. Wouldn’t call the exchanges listed above as P2P as there is a central liquidity provider….

  2. Inverstor Clouseau

    September 11, 2017 at 4:22 pm

    Amazing that you got an interview with that guy!

    • Mati Greenspan

      September 11, 2017 at 5:57 pm

      Indeed. Quite a rush. I think he’s also finding ways to cope with the new found stardom.

  3. Tarik

    September 11, 2017 at 5:28 pm

    Having particularly BITTREX listed in there made me confused:
    I always heard it is Chinese but their advertised HQ is in the US… so is BITTREX really in the range of the blade?

  4. Mati Greenspan

    September 11, 2017 at 5:58 pm

    To the best of my knowledge Bittrex.com is a US exchange. It’s listed here as the top 6th in the world by volume.

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Altcoins

Stellar Lumens Update: Acquisitions and Retirement Accounts

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Stellar Lumens is in the headlines this week amid reports that it is negotiating to acquire a high-profile startup by the name of Chain. Meanwhile, a bitcoin IRA that lets users buy cryptocurrency for retirement added XLM to its list of available assets, potentially raising the investment appeal of the Stellar protocol.

Stellar Eyes Chain Acquisition

Fortune reported Wednesday that Stellar has been in talks to buy the San Francisco-based blockchain startup for $500 million. Citing anonymous sources, the report said the payment would be made in XLM, the seventh-largest cryptocurrency by market capitalization. No cash or equity will be part of the sale, which has yet to be finalized.

Although Stellar’s plan for Chain is not yet known, its interest in the startup is tied to its team of talented blockchain developers. Stellar founder and crypto trailblazer Jed McCaleb has a keen eye for talent, having founded Mt. Gox, eDonkey and Ripple XRP.

Chain develops enterprise-grade blockchain solutions, including ledger products that allow businesses to transfer funds in token format. The company raised over $43 million in venture funding from high-profile investors including Visa, Nasdaq, Citi Ventures and Blockchain Capital.

It is not entirely clear how the purchase would impact XLM’s market value. For current investors, the main concern is a wholesale dump of Lumens by Chain’s backers in the event that the sale actually takes place.

At a current price-per-coin of less than $0.23, the Chain acquisition would translate to roughly 219.3 million XLM. There are roughly 18.7 billion Lumens in circulation, giving the currency a total market cap of $4.3 billion.

Stellar for Retirement

The BitcoinIRA retirement platform has announced the addition of both Stellar Lumens and Zcash to its available list of cryptocurrencies, giving investors the ability to diversify their crypto holdings for retirement.

“[W]e’re excited to meet the high demand for both Stellar Lumens and Zcash in the marketplace by making these coins available to customers looking to diversify their retirement portfolios,” said Chris Kline, BitcoinIRA’s Chief Operating Officer.

In addition to Lumens and Zcash, the BitcoinIRA platform allows retirement planners to access bitcoin, Ethereum, Ripple, Litecoin, bitcoin cash and Ethereum Classic.

Crypto IRAs fall under a much broader category of assets called digital IRAs, which are self-directed retirement accounts. Cryptocurrencies are recognized by the IRS as property, which allows for their inclusion in retirement accounts. Self-directed IRAs have unique tax benefits that can help investors maximize their digital currency holdings.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 462 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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Analysis

Crypto Update: Coins Drift Sideways as Trading Activity Plunges

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Liquidity dried up in the cryptocurrency segment in recent days, as trading volumes have been declining progressively, while the major coins got stuck in tight ranges. Only a few coins show signs of activity, and the bearish short-term patterns continue to dominate the market. With a group of currencies, namely Litecoin, Monero, Dash, and Bitcoin itself clearly dragging the segment down, the short-term trend will likely continue, as the previous leaders are now showing strength either.

While all of the top digital currencies are showing some gains today, and the total value of the market edged close to $290 billion, major resistance levels are still towering above. The fact that the effect of the Bithumb hack faded away quickly is a positive here, but until signs of bullish momentum and a clear leadership forming, the short-term outlook remains bearish.

BTC/USD, 4-Hour Chart Analysis

Bitcoin continues to trade near the $6750 level, edging ever closer to the declining short-term trendline, in a bearish consolidation pattern. Bulls would need a sustained move above $7000 to negate the declining trend, but for now at least a test of last week’s lows is likely with a possible move towards the key long-term zone between $5850 and $6000.  The short-term zone around $6350 level provides support, while further resistance is ahead near $7350.

Ethereum Nears Trendline as ETC Attempts Breakout

ETH/USD, 4-Hour Chart Analysis

Ethereum has been among the strongest coins in the last few days again, and coupled with its long-term relative strength, the second largest coin is still the best candidate to lead a recovery. That said, the coin still faces strong resistance between $555 and $575, and bullish momentum is suspiciously weak. Primary support is found at $500 with further zones near $450 and $400.

ETC/USD, 4-Hour Chart Analysis

Ethereum Classic has been positively diverging compared to the rest of the market, together with Binance Coin, and to a lesser extent Tron ever since its inclusion to Coinbase, and the coin moved above the key $16 resistance yesterday in late trading.

While ETC is slightly overbought from a short-term perspective, a consolidation above $16 and a subsequent move higher could confirm a trend change. For now, the short-term trend signal is only neutral, and traders should remain cautious given the broad downtrend in the segment

Featured image from Shutterstock

Disclaimer:  The analyst owns cryptocurrencies. He holds investment positions in the coins, but doesn’t engage in short-term or day-trading, nor does he hold short positions on any of the coins.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 279 rated postsTrader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.




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Altcoins

Three Reasons XRP Is Not a Security: Ripple’s Garlinghouse

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Ripple CEO Brad Garlinghouse was a featured panelist at the CB Insights Future of Fintech conference in New York today. Chief among the themes in the discussion was XRP, the No. 3 cryptocurrency based on market capitalization in which Ripple owns the majority of tokens.

While the No. 1 and No. 2 digital currencies, bitcoin and Ethereum, respectively, were cleared from being regulated as securities, Wall Street regulators have yet to make a call on XRP.

“I think it’s really clear XRP is not a security,” Garlinghouse said in the session.

There is a misconception in the cryptocurrency community that Ripple controls XRP. In fact, XRP is a decentralized digital currency that Ripple uses in its cross-border payments product xRapid. They could just as easily use bitcoin except “ bitcoin transactions on average are 45 minutes in and 45 minutes out. So XRP is uniquely positioned to solve the cross-border liquidity problem,” Garlinghouse said. 

He went on to outline a trio of reasons why XRP should never be identified as a security.

  1. “If Ripple as a company shut down tomorrow, the XRP ledger would continue to operate.”  
  2. “If you buy XRP, you’re not buying shares of Ripple.” As a holder of XRP, you’re not entitled to dividends or equity. Even though Ripple owns more than half of XRP, it doesn’t give them control of the currency, he said, comparing it to the dynamic between Saudi Arabia and oil. “Saudi Arabia owns a lot of oil, but they do not have control of oil.” 
  3. Utility. “XRP is solving a problem. There’s no security in a utility,” he said, adding that he “looks forward to the SEC clarifying some things.

Crypto Exchanges

Garlinghouse was diplomatic about cryptocurrency exchanges like Coinbase that have yet to add XRP to their trading platforms. In recent weeks, Coinbase announced that it would begin supporting Ethereum Classic (ETC), while many in the cryptocurrency community have been wondering when the U.S.-based exchange will add support for XRP.

“XRP is listed on 75 exchanges around the world. It has expanding liquidity … The consumer speculator is not our target market. Our target market is financial institutions that we can solve big problems for,” Garlinghouse noted.

Crypto Rivalry?

Yesterday Ethereum Co-Founder and ConsenSys Founder Joseph Lubin, who was included among the panelists, took a swipe at rival coin XRP, suggesting it is “massively overvalued.” The same question was posed to Garlinghouse during his session about Lubin’s ConsenSys. Garlinghouse took the high road, saying he was “excited” about them, adding they’re “underrated.”

XRP is the third largest cryptocurrency, boasting a market cap of $21 billion compared to more than $53 billion for Ethereum and $115 billion for bitcoin. Garlinghouse’s outlook is that at least one bank will be using it by year-end.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.5 stars on average, based on 16 rated postsGerelyn has been covering ICOs and the cryptocurrency market since mid-2017. She's also reported on fintech more broadly in addition to asset management, having previously specialized in institutional investing. She owns some BTC and ETH.




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